Tax Dept to vet cash paid over INR 200,000 claimed in suits, SC tells courts
This story was originally published at 20:35 IST on 16 April 2025
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NEW DELHI – The Supreme Court Wednesday told courts in India to intimate the Income Tax Department when a suit is filed with a claim that INR 200,000 and above is paid by cash in any transaction. The income tax department will verify the transaction and see whether it was in violation of Section 269ST of the Income Tax Act, 1961, said the court. Whenever, any such information is received either from the court or otherwise, the income tax authority shall take appropriate steps by following the due process of law, the court said.
Under Section 269ST of the Income Tax Act, it is prohibited for any person to receive an amount of INR 200,000 or more in cash, from a person in a day, either in a single transaction or in multiple transactions related to one event or occasion. If a person receives INR 200,000 or more in cash, he is liable to pay a penalty equal to the amount received in cash.
Whenever a sum of INR 200,000 and above is paid in cash for an immovable property's consideration in the document for registration, the sub-registrar should inform the tax department, who shall take action according to law, said the court.
Additionally, whenever it comes to the knowledge of any income tax authority that a sum of INR 200,000 and above has been paid in cash for any immovable property from any other source or during the course of search or assessment proceedings, the failure of the registering authority shall be brought to the knowledge of the chief secretary of the state, the court said. The chief secretary can then initiate disciplinary action against such an officer who failed to intimate the transaction, said the court.
Most times, such transactions go unnoticed or are not brought to the knowledge of the income tax authorities, the apex court said. It is a settled position that ignorance in fact is excusable but not the ignorance of law, the court added.
The top court was hearing a plea involving a dispute between Bengaluru-based public charitable trust RBANMS Educational Institution and B. Gunashekar, others, over a property known as the 'Sappers Practice Ground'. The property was under the possession of RBANMS since 1929.
Thereafter, Gunashekar, Ramesh S. Reddy, Maheshwari Ranganathan, others, filed a permanent injunction suit, based on an alleged 2018 agreement to sell. The agreement to sell was executed between Gunashekar, Reddy, Ranganathan, and others with the former selling the property for a consideration of INR 90 million. For this agreement, Ranganathan and others had made an advance cash payment of INR 7.5 million. The top court rejected the suit filed by Gunashekar and others and allowed the plea filed by RBANMS Educational Institution. End
Reported by Surya Tripathi
Edited by Nishant Maher
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